Integration. Federalism. Democracy.
by Roberto Castaldi
The Conference on the Future of Europe is an extraordinary occasion for citizens, civil society and institutions to discuss and identify the priorities for a comprehensive reform of the EU. These reforms should aim to make the EU capable of handling fundamental contemporary challenges. Citizens expect the EU:
To meet the needs and expectations of its citizens in the long term, the EU urgently needs a fundamental structural reform of its decision-making, competencies and powers.
Here is why
The EU has many competences but few powers and resources. The EU budget is about 1% of GDP, while its member states budgets are about 45-50% of their GDP. The MacDougall Report in 1977 suggested that a fully-fledged economic and monetary union would require a budget of about 5%. The Next Generation EU established a common European debt to finance certain investments after the pandemic. But this is still short of fiscal powers, which are an essential element of any democratic multi-level system of government, i.e. in all federal systems.
In crucial areas – such as budget and fiscal policies, security and defence, foreign policy to a great extent, and treaty change - the EU decision-making requires unanimity of its Member states in the Council. This creates no incentive for compromise and allows the Union to be blackmailed by any Member state. The result is often a paralysis or insignificant and ineffective low-level agreements, like many foreign policy declarations with little or no impact. The overcoming of unanimity in favour of a qualified majority (which in the Council is 55% of the Member states representing at least 65% of the population) is essential to make EU decision-making more democratic and efficient.
Since the Delors Plan of 1992, the EU could have had a clear strategy to invest in the green and digital transition. But the Member states did not provide the EU with the resources needed to implement it. The Next Generation EU is essentially a revised version of the Delors Plan, almost 30 years later, due to the unanimity requirement to decide on the budget and fiscal policies. Majority voting and fiscal powers are essential in this respect.
Similarly, to act as a single actor, the EU needs to overcome unanimity on foreign, security and defence policy, but also to create a single external representation by the European Commission in all international institutions, and by the European Central Bank in the World Bank and the International Monetary Fund. Just like the monetary union entailed the Europeanization of the Deutsch Mark, the political union will require the Europeanization of the French seat in the UN Security Council and of the French force de frappe. This can be a gradual process – also the creation of the monetary union decided in the Maastricht Treaty included three steps – but it has to be planned from the beginning, together with the creation of a European federal defence. This can be a dual army, with some federal and some national parts, like in the US for a long time. Soft power is essential, but it is not enough to deal with major geopolitical crises like those surrounding the EU: from Belarus and Ukraine, to Syria and the Middle East, to North and sub-Saharan Africa. The US strategic focus has structurally shifted to the Pacific, because of the Chinese challenge for world hegemony. This has left a power vacuum that fosters instability around Europe, because the EU is unable to play a stabilizing role via financial, political and military means. This is opening the way for China, Russia and Turkey to increase their role and penetration in the Mediterranean.
Addressing the external security challenge is crucial to internal security and to creating the sense of internal and external solidarity needed to set up a migration policy respectful of human rights and up to the values the EU is supposed to cherish.
Standing up to defend its values is essential also within the EU, as some Member states are eroding the rule of law and decreasing citizens’ freedom and the EU has so far been unable to prevent or stop this process.
All this would enable the EU to play a more constructive role in the global arena with regards to fighting climate change; ensuring water, food and shelter to billions of people still living in extreme poverty; curing diseases and pandemics; guaranteeing peace and stability in the world; and developing a more cooperative multilateral system of governance, possibly through the creation of supranational global institutions based on the principle of sharing of sovereignty, like the EU itself. To address global problems, we need global institutions endowed with real competences and powers. The EU could be well-positioned to be a motor and a model for a global integration process, based on the recognition of global interdependence, and thus on the need for global democratic institutions.